The gap between what ‘optimistic sellers’ are asking for and what ‘cautious buyers’ are willing to pay is widening, according to a new report.
The latest Property Market Index Review by London lettings and estate agent Benham and Reeves shows how the gap has changed between buyer and seller expectations.
In Q2 2023, the market gap between the mortgage approved price of a buyer (£273,431) and the asking price expectations of a seller (£370,651) increased to 35.6% across the UK.
This is 1.5% higher than the previous quarter, and the largest gap seen since Q3 2020.
Benham and Reeves says this increasing gap suggests that buyers are choosing to act with caution as borrowing becomes unusually expensive.
It adds that, in contrast, sellers who have upped their asking prices in the past quarter are yet to accept that the UK market has cooled slightly.
In London, the gap between buyer (£516,923) and seller (£686,271) is 32.8%, 0.4% higher than last quarter and the largest gap seen since Q1, 2020.
Benham and Reeves says the gap shows ‘the mismatch between seller expectation and the reality of current market conditions is abundantly clear’.
Across the UK, the average sold price of £286,032 currently sits -22.8% below the average asking price of £370,651.
This gap has been increasing quarterly since Q3 2022 and is 1.4% wider than the last quarter alone.
In London, the gap between asking price and sold price sits at -23% having also increased steadily since Q3 2022.
The index from Benham and Reeves shows the average UK house price sat at £307,191 for the second quarter of 2023.
This is a 1% increase on Q1 2023, and the first quarterly increase since Q3 2022.
In London, the current average house price is £572,230 having increased by 0.8% on the quarter. As with the national picture, this is the first price increase since Q3 last year.
Despite this quarterly recovery, London prices have decreased by -1.1% on an annual basis. This is the first yearly drop in the capital since Q4 2019.
Benham and Reeves director Marc von Grundherr says: “It seems we have a market of cautious buyers coming up against optimistic sellers, and the gap in their expectations is widening.
“But it’s by no means unusual for sellers to want more than buyers are willing to give, so none of this is unexpected, especially while the cost of living and borrowing is so high.
“The fact that national sold prices have increased in the past quarter should also instil confidence in sellers by showing that the house price crash predicted by many experts following the disastrous mini budget simply isn’t happening and, from where we are now, is unlikely to happen in the future.
“We predict that buyers will continue to demonstrate a reluctance to overstretch their budgets and borrow too much, but that the resilient health of the market – when many said it would crash – means this is unlikely to have any major mid or long-term impact on house prices.”
The Benham and Reeves Property Market Index Review is based on data from the top four existing indices.
It looks at where the average house price sits overall when taking into account mortgage approved house prices from Halifax and Nationwide, seller expectations via the Rightmove House Price Index, and sold prices from the UK House Price Index.
